The economy (T3) Flashcards
What did Churchill do in order to help the govt. be more active in the economy?
He created many more ministries to help manage the economy
When was registration for employment made law?
1941
How many work orders were issued?
8.5 million
How many people were involved in war work by 1945?
A third
In 1951, what % of GDP was spent on defence?
10% (30% of govt. spending)
How much money was loaned to Britain by the US and Canada?
£2.2 billion
How much money did the Marshall plan give Britain?
£6 billion
How much money did it cost Britain to finance the debt?
£4 billion
What did the Atlee govt. do in order to finance the debt?
Cuts in govt. spending
Controlling private spending
Rationing of goods
How much of the workforce was employed in nationalised industries by 1950?
10%
How much did it cost the govt. to nationalise industries?
£2 billion to nationalise Coal, BoE, transport, electricity, gas, iron & steel.
What did spending so much money on these industries mean?
There was very little money left to invest with.
What was Butskellism?
A term used to describe the consensual approach to the economy by the Labour and Conservative parties
How much did consumer spending rise by in the 50’s?
45%
How did the increase in spending come about?
Borrow to spend
What did the ‘borrow to spend’ mentality do for the economy?
- 4% growth in inflation
- Increase in imports –> imbalance of payments
How did stop-go economics harm the economy?
Did not encourage foreign exports
How large was economic growth in Britain compared to other countries?
2.3% a year compared to 5.6% in Italy and 5.1% in Germany
What did NEDDY aim to do?
Aimed to produce reports for the future of the economy
Recommended pay freezes and tax increases (not popular)
What was NICKY for?
An advisory body for unions and management. Tried to change wages. TU’s did not cooperate
How was the move towards a more planned economy recieved?
Not well. considerable opposition from the Tories, Treasury & capitalist media.
What was ‘Dash for growth’?
A demand management strategy that thought injecting high levels of demand would stimulate investment.
Was ‘Dash for growth’ successful?
No. More demand = More imports = larger balance of payments deficit = less investment
What is Stagflation?
When there is high interest and low productivity
What were the key causes of stagflation?
- Increased consumer spending led to larger balance of payments defecit
- Increased borrowing from IMF
- Rising unemployment
How did Wilson attempt to help the economy?
Attempted to invest in technology, but attempts failed due to continuing stagflation
In 1967, what was the pound devalued to?
from $2.80 to $2.40
How did Heath want to do to help the economy?
- Reduce govt. intervention
- Cut state spending
- More control of the unions
Why did Heath’s policy fail?
- Oil crisis
- Inflation rose due to oil crisis
- Rising unemployment
- U-Turn
- £2.5 billion pumped into economy
What indicated the selsdon man approach had been abandoned?
The fact that £2.5 billion was pumped into economy, brought unemployment down to 550,000
